House shopping? Better polish your r&eacute;sum&eacute;

A headshot and bio are standard protocol to get an audition for a TV show or a play. But are they really necessary to buy a house?

They are in some neighborhoods of Los Angeles. There, in addition to offering as much as $75,000 over the asking price, buyers are sending flowery bios, pictures, and letters to sellers.

"I just oohed and ahhed my way from room to room," read one letter to Jane Centofante, who was selling her 2,000 square-foot home in Westwood, a tony L.A. suburb, for a cool $1.49 million. "I gather from your [house] that you are warm and smart and bring incredibly beautiful detail to your world," read another. Centofante was stuck– deciding between the family who included a photo with their dog and the young screenwriter who wrote a flattering two-page letter– when other events put the sale on hold.

Welcome to America's frothy real estate market, where in some places enthusiasm and excess have reached a point that, to many, seems eerily similar to the dot-com craze of the late 1990s.

Of course, housing prices don't rise and fall like stock prices. They move more slowly and because of different dynamics. Still, it's hard to imagine the intensity of today's market continuing indefinitely, experts say.

"There is a conceptual limit that we have gone beyond," says Susan Wachter, professor of real estate and finance at the University of Pennsylvania's Wharton School. "And we are more vulnerable to price volatility. But complicating the issue is that there is no simple measure of a bubble."

Instead, there are anecdotes that would have seemed unbelievable 10 years ago. For example:

* Bidding wars in California are forcing real estate agents to write recommendations on behalf of their clients who are attempting to buy a new home.

* Real estate trade groups in Massachusetts are calling on state officials to approve more housing construction to improve prospects for buyers.

* Retirees moving to Florida are living in hotels for weeks and even months at a time as they scour the state in search of affordable places to live.

Most baffling to economists, and even those who reject the notion of a bubble, is that the supply of homes for sale continues to dwindle in places like Florida, southern California, and Massachusetts. Thus, there's no clear sign that the real estate market has peaked. All of these places experienced double-digit increases in home prices throughout 2004, some repeating their cloud-piercing performance for the third consecutive year.

Big gain in one year

In February, the median price of a home in Florida rose 25 percent to $201,400 when compared with the same month a year ago. The West Palm Beach-Boca Raton area of the state continues to register the biggest leaps in home prices, climbing as high as 34 percent in the fourth quarter of 2004.

Multiple bids keep coming through, says Marilyn Jacobs, who sells homes in Boca. And more often than not, her sellers are rejecting a lot of people.

"They've had to kiss a lot of frogs before they find their prince," says Jacobson, a native New Yorker. "But those other frogs will find their palaces, too. There are still plenty of opportunities."

Not so in Massachusetts. The state has seen a precipitous drop in housing construction, keeping demand taut and prices aloft. The conditions have worsened in three years, evoking a theme akin to the late 1980s.

At that time, housing prices throughout Massachusetts were appreciating rapidly and they didn't correlate with the annual rent a house could command– a relationship economists scrutinize to detect a bubble. The result: a real estate recession that knocked prices down and drove investors away from the housing market.

Despite the evidence, "I don't believe there is a bubble right now,'' says Maggie Tomkiewicz, president of the Massachusetts Association of Realtors, who argues that today's supply-and-demand conditions don't contribute to a real estate bubble. Interest rates were also trending downward in the late 1980s.

Effect of interest rates

But economists today are forecasting that interest rates will rise, a notable characteristic of a cooling trend for the real estate market. The danger is that until that happens, home buyers will continue to snap up real estate they can't afford. Zero percent down and 100 percent financing are influencing many homeowners to live beyond their means.

"It's like you have all of these people driving around in fancy cars and drinking expensive wine because they feel rich,'' says Christopher Thornberg, a senior economist with the University of California at Los Angeles Anderson Forecast. "The problem is there is all of this money floating around, and something has to break.''

Thornberg's prognosis: "The whole US is in a bubble right now. And it could go on for another year.''

Or burst in the next six months, according to Harvey Dent Jr., author of The Next Great Bubble Boom. He bases his prediction on a recent estimate from the National Association of Realtors that 23 percent of last year's home sales were second homes purchased by investors.

That made sense when real estate proved a better investment than poor performing stocks. But as interest rates rise, Dent says, they will push investors out of real estate and back into stocks or bonds. "That's why I'm renting an apartment in Miami Beach," Dent says. "I don't want to get stuck owning some overvalued piece of property."

Delay in the deal

Unfortunately, Jane Centofante has yet to sell her home in Los Angeles. An inspector found traces of creosote– a mixture of potentially toxic chemicals– throughout her home. Since the finding, she has lost four potential buyers during escrow, that critical period of time when a buyer and seller work out the money and other requests when transferring ownership of a home.

"I'm ready to sell. And I want to sell. But now I can't," says Centofante, who hopes to have the creosote problem remedied before the market sours.

The author is a contributor to The Christian Science Monitor, where this story originally appeared.